On January 1, 2020, Empress Bank granted a loan to a borrower. The interest rate on the loan is 10% payable annually on December 31, 2020. The loan matures in three years on December 31, 2022. Principal amount 5,000,000 Direct origination cost incurred 457,500 Origination fee received from the borrower 200,000 After considering the origination fee charged against the borrower and the direct origination cost incurred, the effective rate on the loan is 8%. Prepare the journal entries for 2020, 2021, and 2022.
On January 1, 2020, Empress Bank granted a loan to a borrower. The interest rate on the loan is 10% payable annually on December 31, 2020. The loan matures in three years on December 31, 2022. Principal amount 5,000,000 Direct origination cost incurred 457,500 Origination fee received from the borrower 200,000 After considering the origination fee charged against the borrower and the direct origination cost incurred, the effective rate on the loan is 8%. Prepare the journal entries for 2020, 2021, and 2022.
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 1PA: On January 1, 2018, King Inc. borrowed $150,000 and signed a 5-year, note payable with a 10%...
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On January 1, 2020, Empress Bank granted a loan to a borrower. The interest rate on the
loan is 10% payable annually on December 31, 2020. The loan matures in three years on
December 31, 2022.
Principal amount 5,000,000
Direct origination cost incurred 457,500
Origination fee received from the borrower 200,000
After considering the origination fee charged against the borrower and the direct
origination cost incurred, the effective rate on the loan is 8%.
Prepare the journal entries for 2020, 2021, and 2022.
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